Taxes on Casino Winnings
Online casinos are websites that provide the opportunity to participate in gambling remotely, without “actual” visiting a gaming establishment.
Currently, they are very popular due to such benefits:
- low operating costs;
- understandable terms and rules;
- no physical presence of the player.
However, if you dream to earn a fortune this way, keep in mind that a certain amount of your possible treasures will go to the tax office. With global Internet penetration, many states found legal mechanisms to financially control this incredibly popular industry.
Basic Rules & Practices
The operation of virtual casinos on world web as registered domestically is prohibited in many countries. But users can visit such gaming platforms from PC or gadget and win a decent amount.
Most online casinos are registered offshore. This procedure is relatively inexpensive: the company’s opening is about $1.5-2 thousand. Legalization will cost more: it depends on the offshore zone and the license cost ranges from $15,000 (Costa Rica) to $350,000 (Austria). Usually local authorities demand tax reports from online gambling’ owners.
As for clients, the payment of taxes from the winnings to large degree remains on their conscience. Most people use various tricks to avoid this official procedure: for example, they keep profits on electronic wallets. Using such a virtual item, you can pay for purchases on the Internet or withdraw small amounts to accounts in foreign banks, where bank secrecy is fixed by law.
However, some countries have very clear legislation. In the United States, players are responsible for a payroll tax of 30%, while winnings in blackjack, baccarat or roulette are not taxed. Taxation in the US can be avoided if the country where the player lives has entered into an agreement to avoid double taxation. Some money still has to be transferred, but in your own country. E.g. in Latvia, the government set a win rate of 0%, regardless of the size of the prize.
Gambling Taxes in New Zealand
NZ gambling online operators have to pay considerable sums to the state treasury:
- deductions to the government – 20%;
- contribution for treatment of gambling addiction – 1.3%;
- covering expenses of the Department of Internal Affairs – 2.2%;
- public payments – 2.26% and donations – 36.53%.
In total, the amount of annual contributions to the Government of New Zealand is more than two hundred and fifty million US dollars. No doubt, the clients have also a number of fiscal obligations.
It’s wise to remember that evasion of taxes leads to troubles. Player may face serious fines and even criminal liability. So make sure you can pay taxes on time and file an annual income statement.